Spending slump hits Kingfisher profits

KINGFISHER, owner of the B&Q DIY stores chain, said that group retail profits for the first quarter plunged 15.6% to £125.9m. It added that trading remains challenging in its key French and UK markets.

Kingfisher, which is Europe's leading DIY group, issued a shock-warning last month that cooling consumer demand would hit quarterly profits. It then became a takeover target when chief executive Gerry Murphy held talks in late April with American home improvement groups Lowe's and Home Depot.

Same-store sales dropped 5.6% in the first quarter. Turnover at British market leader B&Q plunged 7.7% amid the spending slowdown, while same-store sales at France's Castorama were down 4.4%.

Murphy said in a statement: 'With the key summer season still to come, it is too early to judge the outlook for the full year. However, trading in the first three weeks of the second quarter continues to be challenging in the UK and France.' In Britain, sales were weaker across all categories as shopper numbers fell. Despite the fall in revenues, however, B&Q retained its market share.

Kingfisher shares, which have underperformed the FTSE 100 index by almost 18% in the past 12 months, closed yesterday at 257p.

A raft of retailers, from clothing chain Next to general merchandise store Argos, have blamed falling sales on waning demand. A series of interest rate rises have taken their toll and home owners are seeing their mortgage repayments leap as they come out of low fixed-rate deals.